Why private equity firms see the appeal of healthcare finance expertise

• Finance leaders of traditional healthcare providers may have opportunities to pursue positions with private equity firms.
• Firms can use finance leaders who understand complex payment systems and the operating environment of a healthcare organization.
• Candidates to move from hospital finance to private equity should be prepared to work in a nimbler environment where change happens quickly.

Dave Fielding doesn’t have the typical healthcare CFO’s resume. After his first role in finance, at a software company, he moved to biotech and then to a generalist private equity firm, Cerberus Capital Management. As vice president of finance from 2008 to 2010, he worked with companies in several industries, learning “how to boil down a business into its basic components,” he says.

In 2010, Cerberus acquired Caritas Christi Health Care in Boston and converted it from a not-for-profit system to a for-profit accountable care organization called Steward Health Care. Fielding became Steward’s vice president of finance, a role he served in for four years. Then, in 2014, he became the first CFO at Iora Health, a startup that manages primary care practices and signs value-based contracts with Medicare Advantage plans, as the company was kicking off its campaign for Series C funding.

Despite his own nontraditional career path, Fielding believes healthcare finance leaders who take more traditional career routes can be attractive to private equity firms. “The private equity investor needs folks who have that healthcare operating experience,” he says. “If people understand healthcare financials, they can be very valuable partners with a private equity investor.

Not an easy career change

Making the transition from hospital finance to private equity can be difficult because many firms prefer to hire finance leaders who already have private equity experience, says Thomas Quinn, senior partner and managed care practice leader with the Boston office of executive search firm WittKieffer. Unless they have contacts in private equity, leaders with traditional hospital finance backgrounds may have a difficult time breaking into that world, he says.

Still, over the past five years, Quinn has known seasoned hospital CFOs who decided to pivot and work for a private equity firm near the end of their careers (they also had the security of supplemental income from an executive retirement plan). Such leaders can be especially attractive to private equity because they understand the healthcare industry’s complex reimbursement system and how large healthcare organizations operate, he says.

Bringing the right mindset to a new role

For hospital finance leaders who are ready to make the leap, Fielding says, bringing “a mutual degree of respect and curiosity” to work with private equity leaders can go a long way. “If you come in admitting what you don’t know, it’s a lot better than coming in and dictating how things should be done.”

Learning to move at a faster speed in a smaller, nimbler workplace also is essential for finance leaders who made their careers in larger, more bureaucratic organizations. “Private equity firms want to make change quickly, and to succeed, you need to be ready for that pace,” Fielding says.

In his view, private equity companies also tend to put greater emphasis on meeting performance metrics than do traditional healthcare organizations. “Between the pace and rigor, it can be very challenging, but it also can be very rewarding because there is a lot of opportunity to improve the business as well as deliver better service and care to patients,” Fielding says.